After Soaring 361% in Just 1 Year, Can Palantir Stock Keep Climbing? History Offers a Clear Answer

Palantir Technologies (PLTR) has been the poster child of AI-driven growth over the past year, with its stock soaring 361% from its May 2024 lows to its May 2025 highs. But as valuations hit stratospheric levels and volatility returns, investors are asking: Can this momentum continue? The answer lies in dissecting Palantir’s fundamentals, market context, and historical patterns.

The Surge: A 361% Jump, But the Math Says More

First, the 361% figure is often cited as the stock’s 12-month gain, but the actual data paints an even steeper picture. From $21.32 on May 3, 2024, to $117.30 by May 9, 2025, Palantir’s stock increased by 454% (see below). This trajectory was fueled by a confluence of factors:

• AI Adoption: Its AI Platform (AIP) became a must-have tool for governments and enterprises, with U.S. commercial revenue surging 71% in Q1 2025.
• Government Contracts: A $178M U.S. Army deal for AI military logistics and a $30M ICE deportation system contract solidified its position in national security.
• Valuation Momentum: Inclusion in the Nasdaq-100 index and retail investor frenzy (it ranked third in popularity behind Tesla and Nvidia) pushed the stock to $124.62 in February 啐2025.

The Red Flags: Valuation and Volatility

However, the stock’s 520x trailing P/E ratio and 196.9x forward P/S multiple (as of May 2025) have raised eyebrows. Analysts like Jefferies’ Brent Thill called the valuation “irrational,” noting it trades at 90x revenue, far exceeding peers like Microsoft (30.3x P/S) or even AI darling NVIDIA (46x P/S at its peak).

The market’s skepticism is reflected in post-earnings volatility. Despite beating Q1 2025 estimates (39% revenue growth to $884M), shares fell 12% after the report due to concerns about slowing international sales and a $30M revenue shortfall in Europe. This mirrors past patterns:

• In 2024, the stock dropped 38% from its February 2025 high amid broader tech sector declines.
• In May 2024 alone, it swung +8% to -15% in two days, highlighting sensitivity to macroeconomic fears and valuation concerns.

The Case for Continued Growth

Bulls argue Palantir’s fundamentals justify its premium. Key data points:
- Customer Pipeline: Remaining deal value (RDV) rose 45% YoY to $5.4B by late 2024, with 139 contracts over $1M in Q1 2025.
- Profitability: Gross margins expanded to 64% in 2024, and free cash flow guidance was raised to $1.8B for 2025.
- Market Opportunity: The global AI software market is projected to hit $2.3T by 2030, with Palantir’s AIP positioned as the “operating system for the modern enterprise.”

CEO Alex Karp’s vision aligns with this bullish narrative: “We’re not just selling software—we’re redefining how governments and corporations operate in the AI era.”

The Historical Precedent: Can It Sustain?

History offers caution. The dot-com bubble saw companies like Cisco and Amazon briefly hit 40x P/S, while NVIDIA’s AI boom peak was 46x P/S—both far below Palantir’s 90x.

To justify its valuation, Palantir must:
1. Deliver on International Growth: Europe’s revenue share dropped to 10% in 2025 from 16% in 2024 due to slower AI adoption. Reversing this decline is critical.
2. Maintain U.S. Momentum: Government revenue grew 45% YoY in 2024, but political shifts (e.g., U.S. defense budgets) could disrupt this trajectory.
3. Expand Commercial Use Cases: Success with clients like Citi and BP must translate into broader enterprise adoption.

Conclusion: The Math Says “Maybe,” but History Says “Be Cautious”

Palantir’s stock has every reason to keep climbing—its AI platform is unmatched, its contracts are growing, and its market opportunity is vast. However, the 520x P/E is a ticking time bomb.

Investors should heed two data points:
1. Revenue Growth vs. Valuation: Even if Palantir grows at 40% annually for five years (a stretch), reaching $18B in revenue by 2028 would still leave its P/S at 10x (assuming a $180B market cap). This is far below current multiples.
2. Analyst Consensus: 70% of analysts rated it “Hold” in early 2025, with a $44.85 average price target—40% below then-current levels.

In the short term, Palantir’s stock could rise further on strong earnings or new contracts. But history shows that valuations this extreme rarely sustain without years of exponential growth. For now, the answer is clear: Buyers should be prepared for roller-coaster volatility—and hope the AI future arrives faster than Wall Street expects.